The Federal Reserve has announced a new round of Quantitative Easing, hoping to boost a sluggish economy with a influx of new cash. This "open-ended QE" signals a new direction for the Fed that they will be taking a much more active role in juicing the economic recovery and they won't stop until they are satisfied it has worked.
The news isn't so much that the Fed will spend $40 billion a month in mortgage-backed securities — a significant, but not outrageous sum — but more that it is sending a clear signal that our central bank will be taking a more active role in the economy for the foreseeable future. The Fed announcement states that its low-interest rate policy will be extended well in to 2015 (a year-longer than they had previously committed to) and that their "accommodative monetary policy" will continue even after the economic recovery gets moving again. Rather than setting a goal for a specific amount of money to enter the market as they have in the past, the Fed is instead saying it will just keep buying those mortgage-backed securities until labor market conditions improve — i.e., when the unemployment comes back down to reasonable level.
The markets are reacting positively so far, as the Dow Jones stock index has reached its highest mark since 2007. The only remaining question is how the politicians will react. Many conservatives have already accused the Fed of manipulating currency and debt markets (and causing inflation) on behalf of the president. This decision will only give more fuel to those theories.
Federal Reserve Chairman Ben Bernanke will hold a press conference at 2:15 ET, but if you'd like something to do until then you can read the Fed press release online.